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Digital banks playing key role in the financial system

Digital banks playing key role in the financial system

Interview with Mr. Hamad Rasool Bhullar — an analyst

PAGE: Tell me something about yourself, please:

Hamad Rasool Bhullar: I have been working for both the private and public sectors over the last 33 years in multiple roles with almost 28 years in professional training. With respect to my work with the financial sector, I have been involved in research and training for almost 28 years so far, and conducted over 350 trainings on different aspects of Finance, Business Ethics, Audit and Corporate Governance from basic concepts to professional applications in Projects Finance, Shariah Compliant risk management, investment management and Financial Analysis etc. in addition to the freelance consultancy and Financial Advisory in these fields. I remained a non-executive member on the Board of an Investment Bank for almost 4 years.

My qualifications and experience over the last 33 years have mainly been in Accountancy, Corporate Law, IT, Economics, Corporate Finance and Islamic Finance, Takaful, Business Turnarounds, Projects Finance, Audit & ethics with Training and business advisory in multiple areas of corporate sector as well as public sector within and outside Pakistan. I have the privilege to have issued the first Sukuk in Pakistan’s Investment Canvas with some other first such initiatives.

PAGE: Could you give your perspective on digital banks in Pakistan?

Hamad Rasool Bhullar: Digital banking is playing a great role in Pakistan’s financial system by becoming a strong arm for the financial inclusion of even those who cannot open a bank account in a regular bank.

However, as we have got multiple channels and resources in the digital banking system in Pakistan, which are growing at quite a faster rate by expanding the size of the market. Thanks to the State Bank of Pakistan (SBP). I can say that, with the advent of Large Value Payment Systems (LVPS) being a great facilitator for corporates through Pakistan Real-time Interbank Settlement Mechanism (PRISM), while RAAST is facilitating great work for small and medium-sized businesses, further on I can expect a great value addition from digital valets, POSs and PSPs in facilitating the retail sector of the economy.

PAGE: What is your standpoint on the technological progress of the financial services industry in Pakistan?

Hamad Rasool Bhullar: I have great hopes, but the process has made it a mandatory requirement for our strategic decision-makers now to become more alert and responsible in developing our system enabling it more reliable and secure. Digital security is becoming a bigger challenge day by day. It is not a matter of any requirements from FATF or IMF, it is now our basic need to be financially more efficient, secure, reliable and readily available.

Technological progress can facilitate its proper role, only if it is uninterrupted, secure and reliable because it is a matter of finances which plays psychologically a great deal in financial security. As they say, we make 100 good moves, nobody notices, while a single point lapsed is cursed by everyone, so when we say technological progress, we mean to tell the financial security and reliability without compromise. You can imagine the role of fintech in that in some areas it showed progress from 70% to 150% which is phenomenal given the other circumstances prevailing in Pakistan during the year 2022.

PAGE: Has branchless banking altered the financial landscape of Pakistan?

Hamad Rasool Bhullar: No doubt about it, it has developed new ideas in business, involvement of more people in financial engagements, expanded employment and brought our new generation to work profitably, provided more independence to the people in undertaking their transactions. It has also lowered the rush on the banking counters of the bank branches as we used to see almost two decades ago. Thus, it has made the thought of bank branches less horrible for the uneducated or low-educated people and reduced the toxic impacts of personal relationships between the bankers and the accountholders.

Brother Jameel Ahmad, Governor SBP, during his speech at the IBP Annual Award ceremony, stressed the need for banks to revisit their traditional approach to service delivery and adapt quickly as digitalization shifts the balance of power from banks to tech-savvy entities, hinting at the growing trend in fintech. He spoke. “Leveraging digital technology is essential not only to promote financial inclusion but also to ensure that the industry keeps pace with emerging global trends.”

PAGE: EasyPaisa by all counts is a big success story in financial services and has managed to substantially increase financial inclusion in the country. Your views:

Hamad Rasool Bhullar: I have no choice but to disagree that EasyPaisa is the pioneer in its business and has captured a larger number of digital Bank Accounts almost 52%, however, JazzCash (with 34%) due to its larger network and comparative business advantage, has supported it well. I can say that both of them are actually not competitors, but companions in business due to the fact that there is still a great potential for growth and expansion in the market. One interesting fact here is that JazzCash in that way has a slightly larger share in business size with 55% as compared to EasyPaisa with 31%, the rest of the others are lagging far behind. EasyPaisa has changed the concept of Fintech in Pakistan, bringing people from far-flung areas into financial inclusion where the mainstream Banks do not open their Branches. Both these companies have impacted deep digital footprints in the market as the major players in Microfinance Digital Banking. Both the mobile banks i.e., Easypaisa and JazzCash are connecting the way for a digital and cashless future of banking in Pakistan.

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